Special Coverage

HERNDON, VA – Volkswagen Group of America Inc.’s drive toward greater U.S. market relevancy begins in earnest this week with the unveiling of the new Passat sedan at the North American International Auto show today.

But while new product is key if the auto maker is to more than double its sales to 800,000 vehicles by 2018, it isn’t the only hurdle VWA will need to clear, President and CEO Jonathan Browning notes in a meeting with international and U.S. media here Sunday.

In addition to the revamped Jetta launched in late 2010 and the Passat coming in September, Browning says VWA will put renewed emphasis on peddling more Golf hatchbacks to U.S. buyers and try to add to current sales momentum for its Tiguan small cross/utility vehicle. A new Beetle is due for the ʼ12 model year, further adding to the brand’s product arsenal.

VWA also will cast a longer-term eye at filling holes in its product lineup, namely in the fullsize car and large CUV segments.

But before it can expect to conquest new buyers and build market share, the auto maker will have to find a way to alleviate quality concerns and get the VW brand on the consideration lists of more American buyers, Browning notes.

“We became a marginal player in one of the world’s most important markets,” he says. “That’s no longer acceptable.”

Despite efforts in recent years to improve product reliability, VW’s quality scores and ranking took a hit in the latest J.D. Power Initial Quality Survey. Its dealership rating also tumbled in Power’s Sales Satisfaction Index.

But Browning is vowing to reverse the trend and get VW among the top five auto makers in the IQS rankings. He also is promising to step up efforts at social-media marketing and says the company is working with its dealers to improve the car-buying experience.

“As a group, we need to be successful in the U.S. to meet our global objectives,” Browning says, referring to Volkswagen AG CEO Martin Winterkorn’s 2018 target of becoming the No.1 auto maker worldwide in both volume and revenue.

To improve customer satisfaction, VW already has revamped management, the executive says, shifting responsibility for quality from its aftersales organization to a dedicated quality team.

Some customer complaints have been centered on how devices operate, not actual defects, Browning says, and VW now will be positioned to act faster to work with engineering and manufacturing to make changes to accommodate American tastes.

“Our organization is now committed to understanding U.S. customer requirements,” he says. “This organization is absolutely committed to turning (its quality performance) around. In the past, it’s taken too long to get things fixed.”

VWA’s 580-strong and slowly growing dealer organization also must improve, Browning says. Currently, the bulk of the brand’s sales come from a small percentage of dealers.

“We need more consistency throughout our network,” he says, adding average dealer throughput must rise 147% by 2018 if the VW brand is to hit its 2018 U.S. sales goal.

Browning ultimately would like a fullsize car in the lineup, though he says that’s largely the Audi-brand’s territory and not of the highest priority for VW. The next-generation Phaeton is expected to make its U.S. return, but he does not confirm those plans.

More important to growth are bigger, American-tuned versions of the Touareg and Tiguan CUVs.

“The Toureg is doing well, but there are some problems with it (for the U.S. market),” he says. “The Tiguan needs to be slightly larger in its next generation, but the current (model) is still building (momentum).”

Not expected to come to the U.S. is VW’s Amarok compact pickup, and Browning indicates there no longer are plans to offer the small Polo here.

A year ago, his predecessor, Stefan Jacoby, who left to head Volvo Car Corp., indicated a Polo sedan and a second undetermined derivative were part of the importer’s future product lineup.

Also not in the cards is the tiny Touran CUV sold in Europe. “We think that’s too small for the U.S.,” Browning says.

One possible addition would be the Scirocco performance model, which the VWA executive says he’d like to see come here in its next generation.

Marketing will have to play a big role if the VW brand is to land on buyer radar screens, Browning says. Currently, only 7% of Americans consider a VW when purchasing a new car, and that will need to hit 15% if the 2018 target is to be reached.

Social media will be relied on heavily to plant the VW-brand seed in the minds of prospective U.S. buyers.

“Sixty-percent of people discuss vehicles in their social networks – and not just the youth market,” Browning says. “Half of all older age groups engage in social media, so it is important to respond to that and engage them. We have to adjust our marketing approach.”

Despite the quality record and dealer issues, VW says it already is winning away buyers from other brands. Sales of the revamped, lower-priced and de-contented Jetta jumped 40% in the fourth quarter, with 60% of buyers trading in vehicles from other auto makers, officials say.

This year, Volkswagen brand sales are expected to reach 300,000 units, up from 256,830. That would equate to a 2.3% share of the market, which the auto maker forecasts at 13.1 million. Last year, VW’s share totaled 2.2%, according to Ward’s data.

“We have a long way to go and a lot of work to do,” Browning says. “But we’re on our way. VW is writing a new chapter in the American market.”

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